tv Your Money CNN April 26, 2014 11:00am-11:31am PDT
how many people he saved but dozens of people may owe their lives to a south korean fisherman who used his tiny boat to rescue them from that sinking ferry. this story when the "newsroom" returns in 30 minutes from now. i'm fredericka whitfield. stay tuned. right now, time for "your money" with alison kosik. >> america's middle class no longer the richest in the world. i'm alison kosik in for christine romans. this is "your money." your middle class paycheck is not keeping up with the rest of the world. this week a stunning report from the "new york times." for the past 14 years median incomes have grown nearly 20% in canada and in britain as well. they've also grown double digits in ireland and the netherlands, but in the u.s.? median incomes have barely budged at all, up just .3 of 1%. meantime america's rich are doing just fine, from 2000 to 2012.
95% of the income gains went to the top 1% of earners. yet some billionaires have said they feel persecuted that there's a war on the 1%. not yet a billionaire. poppy harlow sat down with the world's third richest man this week, warren buffett. continues to feel like that one america, two economies. you know, how does buffet see this income divide playing out? >> that's a lot of what we talked to him about. he sat down with him at a new york city restaurant. he had a luncheon for the glide foundation, something he does to raise money with him. billionaire tom perkins recently said the 1% is being persecuted. his fellow billionaire sam zell said the 1% should be emulated, not envied. the 1% work harder. i asked buffet if he thinks the 1% which he is a part of has been attacked unfairly will. >> i don't see anybody in the 1% who want to leave that category and sdwroin join.
the 99% because they're being untacked. >> do you think they're being attacked unfairly? >> believe me, it is no great -- it's no great burden to live in the 1% or even the .1 of 1% at all. >> minimum wage is a key topic right now in this country. should the federal minimum wage be raised? >> that's the toughest question you can ask me because i've thought about it for 50 years. i don't know the answer. >> really? >> well, i just don't -- economics you have to say and then what? the real question is, are more people going to be better off, you know, if it is raised. and i don't know the answer to that. i know if you raise the earned income tax credit significantly that would definitely help people who have gotten short sticks in life. but you do lose some employment as you increase the minimum wage. if you didn't i would be having $15 an hour. if you actually got the same result in all other ways but you won't. i just don't know the answer on it. i do know that $7.25 an hour is
not what should be what people are trying to live on and the country is prosperous as ours. >> you have warned of consequences. >> well, i think obviously at some point there could be social unrest but there also may be a correction. of the forces that would lead it again. that would be more for the tax system than anything else. i think the natural tendency is for inequality to widen. i don't think that's a given outcome because there are ways that we, in particular, government, can intercede in that. >> what can you do in a day and age where ipads can replace certain jobs and they are? >> it's always good to replace jobs. >> it's always good to replace jobs? >> yeah. i mean, we had -- i don't know if it was 70% of the people working on farms. think of the number of jobs we got rid of. if you told people then we were going to get rid of -- 2% or
some day or 3%, they would say the world is going to go to hell. but you want to free up people for other things. i mean, the less people it takes to build a car the better off we are. >> they have those other jobs to go to. >> that's been the question. when the tractor came along and the combine and when they put robots in auto factories or whatever. people always say, where are they going to go? the market system has found places for most of them but it does rearrange things in a big way in terms of what talents get paid for. >> and you know i asked buffett if that's the case how do you build up the middle class in this country and he admitted that is one of the biggest questions that our society is struggling with. he believes, quote, the market system will produce economy. he says the market works. eventually it works out. you know, it was very interesting to hear how torn he is on the minimum wage debate despite being a democrat, big su supporter of president obama who
is pushing for $10.10 an hour minimum wage, he is torn as are so many people in this country. >> looks like a great interview. >> thank you. we have more on cnnmoney.com. he weighed in on the 2016 presidential race. america's middle class wants the world's richest can no longer claim that distinction. the rest of the industrialized world has been getting nice raises. according to the "new york times," after tax middle class incomes in canada now appear to be higher than in the united states. nicholas chrisoff is a columnist for the "new york times." and cnn's global economic analyst and assistant managing editor of "time." there are some who say the middle class is struggling because, to be quite honest, there aren't good jobs out there, job growth is slow. not because america's billionaires are doing so well. are they wrong? >> yeah, i mean, i think they are kind of manifestly wrong in the sense that if you look at the pie, then the pie is
growing. but the median american's slice has been stagnant. and you can see that if you make a comparison with france. over the last couple of decades, france's overall economy has grown more slowly than america's but because -- so the top 1% in america then better than the french 1% but the bottom 9 % in france have done better than the bottom 99% of americans. at tend of the day that is fund m ment ali where the economy per fors and government performs and society performs. by that since the 1%s that done well but the overall economy and countries, frankly, have not. >> let me ask you this. salaries for top executives are exploding in the u.s. ceos made unbelievably 270 times more than workers in 2012. corporate profits are at a record high. that's as we're seeing wages sitting stagnant. so what's the danger to the u.s.
economy? >> well, it's interesting because the u.s. economy is made up of 70% consumer spending. so it follows, to many economists and certainly to me, that if you have an economy in which people's wages really are stagnant the medium wage is not rising, eventually that's going to be a problem in an economy that depends on consumer spending. that's why i think in some ways companies sitting on all of this cash are ultimately bankrupting themselves because eventually we're going to need to we create more jobs, more middle class jobs where people have more money in their pockets to spend on the products and services these companies produce. >> isn't it more that the companies are beholden to their shareholders more than anything? >> well, that's true, too. i think that one of the issues in this country, frankly, is that we do not have good corporate governance. we don't have a strong board system. i wish that warren buffett would have gone further and voted no against coke's very massive corporate compensation program. he abstained because he thought
that it was the wrong plan. but i think that we really need people to stand up and say, you know what, executives are being paid enough. >> how does the middle class kind of get back its edge? warren buffett is saying economic growth is the answer. is that really enough? >> in the long run we need economic growth and in the long run it's not going to be about redistribution but about giving people, you know, better tools. i think there are a number of ways we can do that. and human capital is one of the most basic ones. one of the things that is discouraging about the latest report is if you look at 60-year-olds then, in america, 60-year-olds have better education and technical skills than those in other industrialized countries. you look at 20-year-olds, then we lag near the bottom of the industrialized world. and so it's not just about the after tax median income stagnating in the u.s. and being over taken by other countries but i also about education levels as well, which is really a look to the future. >> good points, nicholas,
rhonda, thank you so much for your time. >> thank you. >> my pleasure. many americans are struggling to get the skills to succeed in this economy. add in a prison sentence and nearly impossible. >> when you lie awake in a bunk at night in a cell that's no bigger than from here to here, you don't necessarily, you know, realize what form your dreams are going to take. when you're actually working and working hard, you're like, this is so incredible. >> a remarkable journey from san quentin to silicon valley, next. i'm m-a-r-y and i have copd.
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it's not for colds, it's not for pain, it's just for sleep. because sleep is a beautiful thing™. ♪ zzzquil. the non-habit forming sleep aid from the makers of nyquil®. silicon valley, the epicenter of america's economy, it's where ideas are born along with newly minted billionaires. travel about an hour up the california coast and you will find san quentin prison. the two places may as well be a world away until now when these tech entrepreneurs met they were behind bars.
>> you know, i'm in prison for carjacking. >> reporter: inmates of san quentin state prison. a program called the last mile teaches tech skills. behind bars they learn art social media and entrepreneurship. it gives them hope of a job outside prison. >> i'm sanely passionate about it. >> reporter: caylee was released five months ago. the last time i saw you guys, you were in prison. and now we're here. >> yes. >> what was it like coming out? >> i would say surreal. >> reporter: even more surreal they have coveted jobs in a start-up world at launch podium. >> chronologically log them. >> reporter: the company builds websites and manages social media for small businesses. for former inmates who have had little access to tech, the irony is not lost. >> re-entering a very advanced technological world. >> the way the internet has changed over years, the proliferation of the kardashians. you know, when i bought my phone i bought it within 24 hours of
getting you and i didn't buy the text message option on it because i didn't think anybody would text message me. yeah, that didn't work very long. i had to get the texts. >> once it hits mainstream you hear about it while incarcerated. that's how we know about jokes and twerking. >> you learned about twerking? >> i didn't personally learn about twerking but, yes. >> reporter: despite limited access to tech and pop culture, the last mile program prepared them for the job. caleb and tulio are full time and floyd is an entrepreneur and resident that means he works here but also has his own start-up. for all of them this job is the one they've been striving for for a long, long time. >> it took me a moment to kind of pause and realize that i am literally living my dream. >> reporter: and they're getting customers. salsa and guacamole manufacturer hired launch podium to manage its website. >> the guys behind this have a bit of a different background, right? a lot of these are former inmates. did that worry you at all?
>> not at all. actually has a better actually to helping people out with a second chance, so to speak. >> reporter: launch podium founder parsons hired several graduates from the last mile. >> to a lot of people what we find interesting is it's compelling for them to work with a company that does go out of its way to help people that don't necessarily get a lot of he. >> when you lie away in a bunk at night in a cell that's no bigger than from here to here, you don't necessarily, you know, realize what form your dream is going to take. when you're actually working and working hard, fantastic opportunities thrown at you left and right, you're literally like, this is -- this is so incredible. >> you see that this program is really working and now all around the country prisons are looking at the last mile program and saying, hey, maybe we could do this because the idea is you don't have to check boxes when you get out. just because you have maybe a spotty past there is opportunity
in technology. >> second phase of their lives. >> absolutely. >> thanks very much. >> thank you. coming up, millennials are driving the hardest part of the housing market. why young americans moving you of mom and dad's basement could mean bigger real estate returns my her... but i didn't always watch out for myself. with so much noise about health care, i tuned it all out. with unitedhealthcare, i get information that matters... my individual health profile, not random statistics. they even reward me for addressing my health risks. so i'm doing fine... but she's still gonna give me a heart attack. innovations that work for you. that's health in numbers. unitedhealthcare. making sure you pay the right price for a new car just got a whole lot easier. introducing the kelley blue book price advisor. the powerful tool that shows you what should pay. it gives you a fair purchase price that's based on what others recently for the same car
♪ or not? what if they embrace new technology instead? ♪ imagine a company's future with the future of trading. company profile. a research tool on thinkorswim. from td ameritrade. gun, cars, cheerleaders. give me 60 seconds on the clock. it's money time. deals of gun sil lenners are booming as owners look to accessorize their firearms. sales increased 37% to nearly 500,000 units in 2013. netflix prices are about to go up. the company says lit soon charge new customers $1 or $2 more a month for streaming but existing subscribers can keep their current rate for a generous time period. five former buffalo bills cheerleaders are sueing the team
for what they call unfair pay and demeaning treatment. this follows similar lawsuits filed by cheerleaders from the oakland raiders and the cincinnati bengals. made in china. tesla plans to begin manufacturing electric cars in china in the next three to four years. china's government is encouraging the adoption of electric cars as country faces a growing air pollution problem. the recall crisis at general motors almost wiped out first quarter profits. the company made just $108 million in the first three months of year and says fixing all those recalled cars will cost $1.3 billion. >> time now for the buzz. stocks split, price hike, tony soprano on demand. let's put 90 seconds on the clock. let's talk netflix first. we heard how netflix raising prices for new subskripers but it's still a darling of wall street. >> you look at the 12-month chart. phenomenal stock. it's come back a little bit this year. i think people are worried about the valuation with reason but
netflix had great earnings and that's why the stock went up earlier in the week when you look at now versus amazon, another momentum stock. netflix to be a tumble after amazon announced it had a great deal with hbo that's going to bring the older hbo shows like "the wire" to prime customers. netflix doesn't have the hbo content. that might be a potential problem for people thinking, do i subscribe to netflix over amazon prime? it might be a difference maker. >> apple making a lot of headlines with its earnings as well. >> the funny thing about apple earnings is no one really paid attention to what the company's profits and sales were. it's all about stock split. it's going to bring the price down to 560 range to 80. they're increasing their stock buyback to make carl icahn happy. this is a slow growth boring tech stock. raising dividends and increasing buybacks. not innovating as much. >> more accessible at $75, $80
apiece. >> could be helpful. price line is trading at $1200 a share and stock is up 75% in the past 12 months. >> right. paul and monica, thank you for your time. the hottest thing in housing right now is renting. millennials are finally moving out of mom and dad's basement. cities are the cool place to live and builders have yet to catch up with demand. but christine romans tells us why the single family housing market may also get a boost from this trend. >> it's the fastest growing part of the housing market. you may not see in your neighborhood. new apartment buildings, popping up everywhere. now with the largest share of total new home construction since the 1970s. new rental apartment projects surged 56% in 2011. 36% in 2012. 25% last year. the forecast to rise 9% this year. has this rental rise reached the top floor?
experts say, not yet. why? call it housing's millennial effect. unemployment still stubbornly high for younger americans. and many already owe tens of thousands in student loans. when millennials find a job they just want a roof over their head, not a mortgage. plus, credit is tight so buying is tough. a down payment even tougher. also, millennials value mobility. and urban areas often convenience. that demand pushing up rent prices across the u.s. rent's up 3% over the past year. and nearly twice that in renter heavy cities like san jose, san francisco, seattle, and boston. but long-term, the millennial affect could produce a familiar result. as this generation grows up, has children, finds more steady employment, the need for more space and the financial prospects of owning a home could push millennials into single family homes. and lift the housing market for everyone else. christine romans, cnn, new york.
coming up, we take you inside a classroom in one of america's richest and most dangerous cities. is money the key to bridging the education gap in chicago? meatball yelling c'mon, you want heartburn? when your favorite food starts a fight, fight back fast, with tums. heartburn relief that neutralizes acid on contact. and goes to work in seconds. ♪ tum, tum tum tum... tums! nineteen years ago, we thought, "wow, how is there no way to tell the good from the bad?" so we gave people the power of the review.
imagine that. the education debate in this country starts and ends with money. how much schools have, where they get it, and what they spend it on. but at fenger high school, principal elizabeth dozer's federal funding is running out. you may have seen her on cnn's original series "chicagoland." christine romans sat down with her at fenger high and christine asks what her students need to graduate and be successful. >> i think it's a variety of things. i think it's exposures to arts education. so often we talk about one segment but it's a myriad of
things. art education is reading and writing, it's for our kids especially it's getting out of neighborhood and having exposure to different things. urban alliance one of our school partners have been phenomenal to connecting kids to corporate partners downtown, giving them internships. so i think it's a wide array of things that make a well-wounded child and make them be able to see within themselves a promise and pot to want something more. >> these things take money and creative use of money. part of the season -- the series from chicagoland has been sort of what you're going to do as this money runs out, this big grant runs out. tell me about the creative ways you use and get money and how money is always forefront on your mind when you're in public education. >> yeah. i think that michelle obama said when she came to chicago not too long ago that resources do matter. we had our grant for four years at $1.6 million at four years. we're able to be more creative. everything from lowering class sizes to deploying full-time
advocates to go to the homes to make sure there's a connection to home and school if a child isn't showing up. >> sending someone to the home? >> yeah. >> wow. >> after school programs would also programs that focus on mentoring youth who might not necessarily want to stay for a basketball program but who might need jobs. those types of things. so all this kind of array of things. this year we did not have that funding. and so the start of the year was a difficult and challenging year for us because the bottom line is that kids need those types of supports in order to grow. one example is i think our read 180 program that we had that we weren't able to fund this year. for kids who are below reading scores. >> innovation is helping at fenger and alum helps start a fund-raising effort on crowd rise. so far it's raised more than $85,000 for the school. thank you for spending saturday smart with us on "your money." this book "capital in the 21st century" is amazon's numb bur
one seller but it's like a phone book and it's out of stock in some cases. not to worry. head to cnnmoney.com and you will find christine romans interviewing the economist that is behind the phenomenon. that's it for me. but don't go anywhere. "cnn newsroom" starts right now. hello, everyone. i'm fredericka whitfield. we're tracking a threat of possible deadly tornadoes and storms. 20 million people could be affected this weekend. a separate storm system produced several violent tornadoes just last night in parts of north carolina. a shredded and leveled homes. folks there are now cleaning up and trying to salvage what they can. a relative of a man who lost his home says this is heartbreaking. >> i understand we got through